Kenny says EU must stick to debt pledge

Expected return to markets should not undermine new debt relief, says Taoiseach

Taoiseach Enda Kenny says EU must stick to pledge on debt relief for Ireland. Photograph: Yves Herman/Reuters

Taoiseach Enda Kenny says EU must stick to pledge on debt relief for Ireland. Photograph: Yves Herman/Reuters

Sat, Mar 16, 2013, 06:00

Taoiseach Enda Kenny has said Ireland ’s expected return to long-term bond markets this year should not undermine his demands in Europe for further debt relief.

Amid scepticism and division in Berlin over the merits of Ireland’s case, Mr Kenny said the execution of a promise by EU leaders to break the loop between bank and sovereign debt remained a critical test of Europe’s credibility.

He was speaking in Brussels after an EU summit, at the end of a week in which the National Treasury Management Agency met strong demand for Irish debt when it sold €5 billion in 10-year bonds.

Asked if he had any concern that the return to private markets would lead other countries to say there was no further need for debt relief, he said the perception that progress was being made should not create the impression the State had emerged unscathed.

Committed support
“That’s why it’s all the more important and all the more necessary that support committed to by our European colleagues be delivered on,” Mr Kenny told reporters, “and I expect that to happen. I certainly have not detected any iota of rowback from that. We’ve been very much at pains to say we have come through an extraordinarily difficult time and are going through an extraordinary challenging period now.”

The Taoiseach’s remarks came ahead of his departure last night on a week-long visit to the US to mark St Patrick’s Day.

Although talks continue on a deal to extend the maturity of Ireland’s bailout loans, some German parliamentarians have let it be known to the administration of chancellor Angela Merkel that they would prefer not to have to vote in the Bundestag to adjust Ireland’s bailout before elections next September.

The Government is also facing resistance in Berlin to its call for the European Stability Mechanism rescue fund to provide capital directly to Allied Irish Banks and Bank of Ireland.

While German officials have not definitively ruled out fresh concessions, they say Dublin has yet to make a convincing case that the aid sought is a precondition for a smooth exit from the EU-IMF programme.

Some officials have suggested Ireland has already received enough relief through the promissory note deal. One said the case of Portugal, which is also seeking longer loan maturities, was more urgent.

“If Ireland had funding peaks that needed to be evened out, and that could be done inside the existing programme without a vote, we could negotiate that.”

European Commission chief José Manuel Barroso noted that Ireland’s borrowing costs this week were lower than Italy and Spain. “So we’re talking about a country which is under a programme, goes to the market and gets better conditions than countries such as Spain and Italy.”

Mr Kenny, who said he would raise the negotiation of an EU- US trade deal in talks next week with US president Barack Obama, said the Government’s objective in talks on the debt talks was to recover as much as possible for taxpayers.

Progress made
The Taoiseach said he had told other EU leaders of the progress being made in Ireland.

“While we’re now recognised as heading in the right direction, the assistance and co- operation that has been committed to by the European colleagues will have to be delivered on to see that Ireland exits its programme safely and can make its way for the future.”